Informal Hierarchy Strength Changes and Their Effect on Performance

Abstract

Despite qualitative evidence suggesting that changes in informal hierarchy strength likely impact performance, informal hierarchy strength changes have received little theoretical or empirical attention. We address this by extending structural adaptation theory (SAT) to develop and test a theoretical model of why informal hierarchy strength changes and how those changes impact performance. Building on SAT’s principle that teams can become more ordered following stimulation, we propose that pressure subsequently increases informal hierarchy strength. In project teams where pressure starts low and increases at the midpoint, informal hierarchy should weaken early in project life and strengthen after the midpoint. We also extend SAT’s asymmetric adaptability principle to consider not just the direction but also the rate of the changes. We hypothesize that sharply strengthening informal hierarchy harms performance, but informal hierarchy strengthening gradually improves performance. SAT also implies that gradual change is promoted by inclusive discussions. Because most influential extraverts tend to squelch inclusive discussions where most influential neurotics tend to be inclusive, teams with most influential extraverts strengthen their informal hierarchy quickly where teams with most influential neurotics strengthen their informal hierarchy gradually. We find support for our theoretical model using longitudinal data and client performance ratings on self-managed project teams. Our results contribute to SAT by showing its application to informal, unplanned changes and introducing the rate of change to its asymmetric adaptability principle. Our findings also highlight the importance of shifting informal hierarchy strength research away from the predominant static approach and toward studying informal hierarchy strength changes.